Shifting Tides in PTAB Practice: Director Review Strengthens Patent Owner Position in Fintiv Analysis

In a significant ruling dated March 28, 2025, the Acting Director of the USPTO, Coke Morgan Stewart, granted Director Review in four related Inter Partes Review (IPR) proceedings between Motorola Solutions, Inc. and Stellar, LLC. The decision not only vacated the Patent Trial and Appeal Board's (PTAB) institution decision but also denied institution entirely, signaling an important shift in how the USPTO evaluates the interplay between district court litigation and PTAB proceedings.

Background: The Motorola v. Stellar IPR Proceedings

The case involves four IPR petitions filed by Motorola Solutions against patents owned by Stellar, LLC:

• IPR2024-01205 (Patent 7,593,034 B2)

• IPR2024-01206 (Patent 9,485,471 B2)

• IPR2024-01207 (Patent 8,692,882 B2)

• IPR2024-01208 (Patent 9,912,914 B2)

  
  

Initially, the PTAB had granted institution in all four proceedings despite parallel district court litigation advancing toward trial. Stellar requested Director Review, challenging the Board's analysis of factors 3 and 4 under the Fintiv framework, which guides the PTAB's discretion to deny institution when parallel district court proceedings are underway.

The Fintiv Framework: A Quick Refresher

Before diving into the ruling's implications, it's worth revisiting the Fintiv framework. In Apple Inc. v. Fintiv, Inc., the PTAB established six factors for determining whether to deny institution due to parallel district court proceedings:

1. Whether the court granted a stay or evidence exists that one may be granted

2. Proximity of the court's trial date to the PTAB's projected statutory deadline

3. Investment in the parallel proceeding by the court and the parties

4. Overlap between issues raised in the petition and in the parallel proceeding

5. Whether the petitioner and the defendant in the parallel proceeding are the same party

6. Other circumstances that impact the Board's exercise of discretion

   
   

Key Aspects of the Director's Ruling

1. Reinterpretation of Factor 3: Investment in Parallel Proceedings

The Director took issue with the Board's analysis of factor 3, which concerns the investment already made in the parallel district court proceeding. The Board had acknowledged the time and effort invested by the parties and the court but then reasoned that "Patent Owner's infringement case alone... could present a substantial, if not overwhelming, burden on the district court's resources" and that "[t]rying invalidity issues adds to that burden."

The Director found this reasoning flawed, stating:

"That analysis could apply in most, if not all, cases and misapprehends the relevant inquiry."

This is a crucial observation. The Director essentially rejected the notion that the general burden of patent litigation on district courts should be a factor weighing against discretionary denial. Instead, the focus should be on the specific investment already made in the particular case at hand.

By the time Patent Owner filed its Preliminary Response, the parties had:

• Served extensive infringement and invalidity contentions

• Served opening and rebuttal expert reports

• Filed claim construction briefs

• Conducted several depositions

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Moreover, the court had held a claim construction hearing and construed the disputed claim terms, with a trial date set for March 10, 2025—eleven months before the Board's projected final written decision date.

Given these substantial investments, the Director concluded that factor 3 "strongly favors discretionary denial."

2. Limitations of Sotera Stipulations: A New Understanding of Factor 4

Perhaps even more significant is the Director's analysis of factor 4, which concerns the overlap between issues raised in the IPR petition and those in the parallel district court proceeding.

The Petitioner had provided a "Sotera stipulation," named after the precedential decision in Sotera Wireless, Inc. v. Masimo Corp. Such stipulations, where petitioners agree not to pursue in district court any ground raised or that reasonably could have been raised in the IPR, have often been seen as a powerful tool for petitioners to avoid discretionary denial under Fintiv.

However, the Director found that:

"Petitioner's stipulation does not ensure that these IPR proceedings would be a 'true alternative' to the district court proceeding."

The Director noted that the petitioner's invalidity arguments in district court were "more expansive and include combinations of the prior art asserted in these proceedings with unpublished system prior art, which Petitioner's stipulation is not likely to moot."

This finding substantially limits the effectiveness of Sotera stipulations in situations where the petitioner is pursuing a broader invalidity strategy in district court. The Director acknowledged that while the stipulation "may mitigate some concern of duplication," it did not outweigh the substantial investment in the district court proceeding or the other Fintiv factors that weighed in favor of denial.

3. Holistic Fintiv Analysis: Considering All Factors Together

The Director emphasized that when considering the Fintiv factors as a whole, "the efficiency and integrity of the system are best served by denying review." This holistic approach suggests that the USPTO is taking a more balanced view of the interplay between district court litigation and PTAB proceedings, with a greater emphasis on avoiding duplicative efforts and respecting substantial investments already made in parallel proceedings.

Game-Changing Implications for Patent Owners

Diminished Power of Sotera Stipulations

For years, Sotera stipulations have been viewed as a near-guaranteed method for petitioners to overcome Fintiv concerns. The Director's ruling fundamentally changes this calculus by examining whether the stipulation truly creates a "true alternative" to the district court proceeding.

Patent owners now have a stronger argument that a Sotera stipulation is insufficient when:

1. The petitioner's district court invalidity case includes combinations with prior art not available for IPR (such as product prior art or non-patent literature without a publication date)

2. The stipulation would still leave substantial invalidity issues to be litigated in district court

3. Significant investment has already been made in the district court invalidity case

This represents a significant victory for patent owners who have often seen their investments in district court litigation undermined by "last minute" IPR petitions accompanied by Sotera stipulations.

Focus on Actual Investment Rather Than General Burden

By rejecting the Board's reasoning that patent litigation generally imposes a burden on district courts, the Director has refocused the analysis on the specific investments made in the case at hand. This benefits patent owners who have diligently advanced their district court cases.

The Director's ruling suggests that the following activities should be given substantial weight when considering Fintiv factor 3:

• Extensive contentions exchanged

• Expert reports served

• Depositions conducted

• Claim construction briefing and hearings completed

• Trial date set within a reasonable timeframe before the PTAB's statutory deadline

Patent owners should document and emphasize these investments when arguing for discretionary denial.

Importance of Trial Timing

The Director noted the eleven-month gap between the district court trial date and the projected PTAB final written decision. This reinforces the importance of Fintiv factor 2 (proximity of trial date) and suggests that patent owners should continue to emphasize early trial dates when possible.

Implications for PTAB Practice Going Forward

For Patent Owners: Strategies to Leverage the New Ruling

1. Document District Court Progress Meticulously Patent owners should thoroughly document all substantive work completed in the parallel district court proceeding, focusing particularly on invalidity-related activities that overlap with potential IPR grounds.

2. Challenge the Effectiveness of Sotera Stipulations Rather than conceding that a Sotera stipulation resolves overlap concerns, patent owners should analyze whether the stipulation truly eliminates duplication of effort. If the petitioner is pursuing invalidity theories in district court that incorporate the same prior art referenced in the IPR but combined with system prior art or other non-IPR eligible references, patent owners should argue that the stipulation is insufficient.

3. Push for Early Claim Construction The Director's ruling emphasized the importance of completed claim construction in the investment analysis. Patent owners in district court should push for early Markman hearings and rulings to strengthen potential Fintiv arguments.

4. Develop Expert Testimony on Invalidity Issues Early The exchange of expert reports was highlighted as a significant investment. Patent owners should consider front-loading expert work on invalidity issues to demonstrate substantial investment.

5. Highlight the Economic Inefficiency of Duplicative Proceedings The Director's ruling emphasized "the efficiency and integrity of the system." Patent owners should frame their Fintiv arguments in terms of system-wide efficiency rather than just prejudice to themselves.

   
   

For Petitioners: Adapting to the New Reality

1. File IPRs Earlier in the Litigation Timeline To avoid substantial investment in district court on invalidity issues, petitioners should consider filing IPRs earlier rather than waiting until close to the one-year statutory bar.

2. Craft More Comprehensive Sotera Stipulations Standard Sotera stipulations may no longer be sufficient. Petitioners should consider broader stipulations that more completely eliminate overlap with district court proceedings, potentially including stipulations regarding the use of the same prior art references even in combination with system prior art.

3. Focus IPR Petitions on "Core" Invalidity Theories Rather than pursuing different invalidity theories in different forums, petitioners may need to consolidate their strongest arguments in a single forum to avoid the appearance of duplicative proceedings.

4. Seek Stays of District Court Proceedings Earlier The temporary stay entered by the district court in this case was premised on the PTAB's institution decision. Earlier stay requests might help avoid substantial investment in parallel proceedings.

5. Consider Alternative Fintiv Strategies Given the diminished effectiveness of Sotera stipulations, petitioners should explore other strategies to mitigate Fintiv concerns, such as focusing on references or arguments that could not be raised in district court due to 35 U.S.C. § 282(b) timing limitations.

   
   

The Bigger Picture: Evolution of the PTAB's Role

This Director Review decision represents another step in the ongoing evolution of the PTAB's role in the patent ecosystem. While the America Invents Act established the PTAB as an alternative forum for challenging patent validity, subsequent developments through precedential opinions, Director guidance, and now Director Review have increasingly refined when and how that alternative forum should be available.

The ruling suggests a view that the PTAB should complement rather than duplicate district court proceedings. When parties have already invested substantially in litigating invalidity in district court, the public interest in efficiency may weigh against instituting a parallel PTAB proceeding, even with a Sotera stipulation in place.

For patent owners, this represents a welcome development that may reduce the "two bites at the apple" problem that has been a persistent concern since the establishment of IPR proceedings.

Conclusion: A Shifting Landscape Requires Adaptive Strategies

The Director's ruling in Motorola v. Stellar marks a significant development in PTAB practice that both patent owners and petitioners must adapt to. The diminished power of Sotera stipulations and the increased focus on actual investment in parallel proceedings create both challenges and opportunities for practitioners on both sides.

Five Key Recommendations for Patent Owners:

1. Accelerate District Court Proceedings: Push for early claim construction, expert reports, and trial dates to maximize investment before an IPR institution decision.

2. Scrutinize and Challenge Sotera Stipulations: Develop detailed arguments about why a stipulation fails to eliminate duplication of effort, particularly when system prior art is involved.

3. Document and Showcase Investment: Create detailed timelines and summaries of work completed in district court to strengthen Fintiv factor 3 arguments.

4. Target Overlapping Prior Art: Identify and emphasize any prior art being asserted in both forums, even if combined differently or with different secondary references.

5. Request Director Review When Appropriate: When the PTAB's Fintiv analysis appears flawed, don't hesitate to request Director Review, as this case demonstrates its potential effectiveness.

   
   

Five Key Recommendations for Petitioners:

1. File IPRs Early: Don't wait until close to the one-year bar if possible, to minimize district court investment in invalidity issues.

2. Craft Broader Stipulations: Consider stipulations that go beyond the standard Sotera language to more comprehensively address overlap concerns.

3. Develop Distinct Invalidity Theories: Where possible, pursue truly different invalidity theories in IPR versus district court to minimize overlap concerns.

4. Seek Early Stays: Request stays of district court proceedings before substantial investment occurs.

5. Focus on Litigation Efficiencies: Frame arguments in terms of overall system efficiency rather than just challenging the trial date or investment.

   
   

The Patent Office's approach to the intersection of PTAB and district court proceedings continues to evolve. By understanding and adapting to the changing landscape reflected in this Director Review decision, practitioners on both sides can better navigate these complex proceedings and develop more effective strategies for their clients.